Income Taxes

12 Months Ended

Aug. 31, 2025

Income Tax Disclosure [Abstract]

Income Taxes

Note 13.    Income Taxes

Earnings before income taxes from continuing operations, are summarized as follows (in thousands):

	Year Ended August 31,
	2025		2024		2023
Domestic	$	70,722	$	59,688	$	26,442
Foreign	50,007		45,831		42,456
	$	120,729	$	105,519	$	68,898

Both domestic and foreign pre-tax earnings from continuing operations are impacted by changes in operating earnings, acquisition and divestiture activities, restructuring charges and the related benefits, growth investments, debt levels and the impact of changes in foreign currency exchange rates. In fiscal 2025, domestic earnings did not include impairment and other divestiture charges. In fiscal 2024, domestic earnings included $0.1 million of non-cash impairment and other divestiture charges, and fiscal 2023 results included $6.2 million of impairment and divestiture benefits. Substantially all of the non-cash impairment and other divestiture charges (benefits) did not result in a tax expense (benefit).

Income tax expense from continuing operations is summarized as follows (in thousands):

	Year ended August 31,
	2025		2024		2023
Currently payable:
Federal	$	14,993	$	10,106	$	5,181
Foreign	12,341		11,599		9,240
State	832		1,172		319
	28,166		22,877		14,740
Deferred:
Federal	16		(1,086)		(2,935)
Foreign	(634)		2,630		3,806
State	432		(1,109)		(362)
	(186)		435		509
Income tax expense	$	27,980	$	23,312	$	15,249

Income tax expense from continuing operations recognized in the accompanying consolidated statements of earnings differs from the amounts computed by applying the federal income tax rate to earnings from continuing operations before income tax expense. A reconciliation of income taxes at the federal statutory rate to the effective tax rate is summarized in the following table:

	Year ended August 31,
	2025		2024		2023
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of Federal effect	0.2		1.3		0.7
Tax on foreign earnings (1)	3.3		4.2		6.0
Foreign derived intangible income deduction	(1.9)		(2.3)		(3.1)
Compensation adjustment	0.7		2.0		1.5
Valuation allowance additions and releases	—		(4.1)		(0.8)
Changes in liability for unrecognized tax benefits	0.2		(1.3)		(0.1)
Repatriation of foreign earnings	(0.7)		1.6		—
Taxable liquidation of subsidiaries	—		—		0.1
Foreign non-deductible expenses	—		0.3		1.7
Changes in tax rates	—		—		(2.0)
Audits and adjustments (2)	0.3		0.4		(2.9)
Research and development tax credit	(0.4)		(0.6)		(0.7)
Other items	0.5		(0.4)		0.7
Effective income tax rate	23.2	%	22.1	%	22.1	%

(1) The Company generated $3.0 million, $3.4 million and $2.6 million of withholding tax and U.S. tax on non-U.S. earnings, net of foreign tax credits for fiscal 2025, 2024 and 2023, respectively.

(2) During both fiscal 2025 and fiscal 2024, the Company generated a $0.4 million tax expense related to audits and adjustments as compared to a tax benefit of $2.0 million for fiscal 2023.

Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities include the following items (in thousands):

	August 31,
	2025		2024
Deferred income tax assets:
Operating loss and tax credit carryforwards	$	37,504	$	73,406
Compensation related liabilities	4,855		4,440
Postretirement benefits	3,204		4,628
Inventory	768		977
Lease liabilities	9,451		8,063
Research and development capitalization	10,563		8,683
Book reserves and other items	6,785		5,096
Total deferred income tax assets	73,130		105,293
Valuation allowance	(27,734)		(57,743)
Net deferred income tax assets	45,396		47,550
Deferred income tax liabilities:
Depreciation and amortization	(26,847)		(25,920)
Lease assets	(9,021)		(7,918)
Other items	(2,065)		(2,716)
Deferred income tax liabilities	(37,933)		(36,554)
Net deferred income tax asset (1)	$	7,463	$	10,996

(1) The net deferred income tax asset is reflected on the balance sheet in two categories: an asset of $13.7 million and $14.7 million for fiscal 2025 and 2024, respectively, is included in "Other long-term assets" and a liability of $6.2 million and $3.7 million for fiscal 2025 and 2024, respectively, is included in "Deferred income taxes".

The Company has $54.3 million and $2.5 million of gross state net operating loss and credit carryforwards, respectively, which are available to reduce future state tax liabilities. These state net operating loss carryforwards expire at various times through 2045. The Company also has $108.8 million and $7.8 million of foreign loss and credit carryforwards, respectively, and $1.4 million of U.S. credit carryforwards, which are available to reduce certain future foreign and U.S. tax liabilities. The majority of the foreign loss carryforwards are not subject to any expiration dates, while the other balances expire at various times through 2035. The U.S. credit carryforwards expire at various times through 2035. The valuation allowance represents a reserve for deferred tax assets, including loss carryforwards and foreign tax credits, for which utilization is uncertain.

In general, the Company’s practice is to reinvest the earnings of its non-U.S. subsidiaries within those operations. Routinely, the Company analyzes the factors surrounding global cash needs and future cash utilization and determines if there are any exceptions. As of August 31, 2025, certain jurisdictions met this exception. On the undistributed foreign earnings of $6.5 million that are no longer permanently reinvested outside of the United States, the Company recorded a deferred tax liability of $0.9 million. If all remaining undistributed earnings were remitted, an additional income tax provision of $0.6 million would have been necessary as of August 31, 2025.

Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):

	2025		2024		2023
Beginning balance	$	13,713	$	14,754	$	15,380
Increases based on tax positions related to the current year	621		1,771		279
Increase for tax positions taken in a prior period	748		201		—
Decrease for tax positions taken in a prior period	(1,060)		—		(56)
Decrease due to lapse of statute of limitations	(620)		(3,054)		(951)
Decrease due to settlements	(69)		—		—
Changes in foreign currency exchange rates	107		41		102
Ending balance	$	13,440	$	13,713	$	14,754

Substantially all of these unrecognized tax benefits, if recognized, would impact the effective income tax rate. As of August 31, 2025, 2024 and 2023, the Company recognized $5.7 million, $5.0 million and $5.2 million, respectively, for interest and penalties related to unrecognized tax benefits. The Company recognizes interest and penalties related to underpayment of income taxes as a component of income tax expense. With few exceptions, the Company is no longer subject to U.S. federal, state and foreign income tax examinations by tax authorities in major tax jurisdictions for years prior to fiscal 2013. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by up to $2.2 million throughout fiscal 2026.        

Cash paid for income taxes, net of refunds, totaled $26.6 million, $23.8 million and $2.7 million during the years ended August 31, 2025, 2024 and 2023, respectively.